[W]e offer the entire Office suite - online equivalents of Word, Excel and PowerPoint - and not just Word as you have mentioned. If it was only Word then yes, many of your points on create vs. collaborate are true but it is far more complex when your data is in a spreadsheet or presentation.

What about the limitations inherent in being a pureplay SaaS/browser-based model?

...[W]hen we say that we are an "online" Office suite, we are not limiting ourselves to just a browser-centric experience. While we do offer a browser-based service that offers functionality equivalent to Word, Excel and PowerPoint, we also offer a client application that makes your existing version of Microsoft Office web-enabled.

So, whatever version of Office you might have (2000, XP, 2003 or even 2007), we web-enable it and provide collaborative capabilities on the desktop - users can then live within these familiar applications and experience both the richness of the desktop application as well as the collaborative capabilities of online services in terms of multi-user editing, discussions, automatic content updates etc.

The point is that "online" need not be synonymous with "browser" and there are other ways to take applications online. With Live Documents, users have the choice and flexibility of working on their desktop or on the browser and enjoy the same application experience on both sides (our browser version is based on RIA technologies like Flash - so it makes for a rich and responsive user interface) - any changes made to a document on either platform are automatically synchronized to the other side.

This sounds very cool to me, and is in keeping with Adobe's AIR technology. Basically, both blur the distinction between "here" and "there," server and desktop.

As for Live Documents and how it compares to Google Docs:

[F]or starters, Google docs is only available as a browser-based service while...we offer a hybrid solution that can be used on the browser or on the desktop and whether you are online or offline.

Also, Google docs is not a benchmark for us because Google itself has steadfastly held (at least in public) that it is not competing with Microsoft. We, on the other hand, are competing with Microsoft Office at least in one dynamic - the Office 2007 upgrade that Microsoft is advocating...we are telling users that if they already have an older version of Microsoft Office, they can web-enable it with Live Documents and access the same capabilities that Office 2007 offers on both productivity and collaboration dimensions (in consort with server-side applications like SharePoint) without needing to forklift their entire infrastructure.

So, as it turns out, we are actually making Microsoft Office itself more powerful in many dimensions - we are not attempting to "kill Microsoft Office" in any way...we are simply leveraging the fact that for many users, their existing version of Office is good enough on the productivity dimension and we are layering on the collaboration dimension on top of this.

And that may well be Live Documents' biggest selling point, and is certainly something I missed in my initial post. It's important for any vendor taking on an entrenched incumbent to be additive or complementary, not a direct substitute. It's a long, slog road to rip-and-replace an incumbent. But given that Live Documents can build on top of the infrastructure that enterprises already have and add thereto, it becomes much, much more interesting.

Especially when you consider some of its in-document collaboration features:

Live Documents provides all the document management features that [traditional Enterprise Content Management solutions offer] - workflow, auditable content, tagging, advanced search - but without requiring users to log in to a centralized respository and do things like check-in/check-out...with Live Documents, all these capabilities are embedded in the document context and travel with it...so for instance, if you open a document requiring approval in Word, you will be notified of the requirement and you can approve it in-situ without having to fire up a browser. Also, we support auditing at a granular level - at a cell level in Excel and at a slide level in PowerPoint - without requiring the user to do anything extra...

There are limitations to this approach (Many enterprises, for example, want that central repository for compliance purposes), but it's very cool nonetheless.

As noted, I've registered for a test drive of the omni-office suite. I'll report here on how it goes. Last night I was dismissive of the product. I'm now pretty interested. I'm betting that Microsoft is, too. Live Documents could offer Microsoft a way to monetize its installed base that has no desire to move to its latest Office suite but would like some of its functionality.